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Summary of Statement No. 165

Subsequent Events

Summary

Why Is the FASB Issuing This Statement and When Will It Be Effective?

The objective of this Statement is to establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In particular, this Statement sets forth:

The period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements

The circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements

The disclosures that an entity should make about events or transactions that occurred after the balance sheet date.

In accordance with this Statement, an entity should apply the requirements to interim or annual financial periods ending after June 15, 2009.

What Is the Scope of This Statement?

This Statement should be applied to the accounting for and disclosure of subsequent events. This Statement does not apply to subsequent events or transactions that are within the scope of other applicable generally accepted accounting principles (GAAP) that provide different guidance on the accounting treatment for subsequent events or transactions. This Statement would apply to both interim financial statements and annual financial statements.

How Will This Statement Change Current Practice?

This Statement should not result in significant changes in the subsequent events that an entity reports—either through recognition or disclosure—in its financial statements. This Statement introduces the concept of financial statements being available to be issued. It requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date, that is, whether that date represents the date the financial statements were issued or were available to be issued. This disclosure should alert all users of financial statements that an entity has not evaluated subsequent events after that date in the set of financial statements being presented.

What Is the Effect of This Statement on Convergence with International Financial Reporting Standards?

This Statement does not address all differences between previous guidance in the United States; AU Section 560, Subsequent Events; and IAS 10, Events after the Reporting Period—for example, refinancing short-term obligations and curing violations of borrowing covenants. The requirement to disclose the date through which the entity has evaluated subsequent events is consistent with the guidance in IAS 10. IAS 10 requires evaluation of subsequent events through the date on which the financial statements are authorized to be issued, while this Statement requires evaluation of subsequent events through the date that the financial statements are issued or are available to be issued.